Don Miller, vice president of Mike Albert Leasing, has witnessed firsthand the evolution of the fleet leasing industry over the past four decades. As the fifth employee hired by Mike Albert Leasing in Cincinnati, Ohio, Miller has seen dramatic changes in fleet leasing starting with the rapid growth in the 1960s, the turmoil of the two fuel crises in the 1970s, the consolidation of lessors in the 1980s, the escalating used-vehicle residuals in the early to mid-1990s, to the meltdown in resale value following 9/11.
Last December, Miller retired from Mike Albert Leasing, after a 45-year career with the company.
Miller joined Mike Albert Leasing in 1957, one year after its founding. Miller worked part-time for Mike Albert Leasing while attending college. After three years at the University of Cincinnati, Miller left the college to join Mike Albert on a full-time basis.
Full-Service Retail Leases
Retail leasing in the late 1950s was a full-service business, which included pickup and delivery of leased vehicles, along with full maintenance.
“Most of our customers during the first 10 years were small businesses and professionals. We had a lot of physicians as customers because our office was 10 minutes away from the major hospital complex,” Miller recalled.
“The reason that Mike Albert started in the leasing business was because the new-car dealers at that time used to wholesale all of their trade-ins,” said Miller. “Mike Albert found it hard to buy quality used cars. To solve this problem, we started leasing cars to generate used cars.”
Mike Albert Leasing bought new cars from local dealers and leased them. When the lease reached end of term, the off-lease car was sent to Mike Albert’s retail used-car lot and sold.
“We made it very convenient for our lessees. In those days you could lease a new car, deluxe Chevrolet or Ford for $75 a month for a one-year lease,” said Miller. “The business evolved as cars became more pricey, and lease terms went to 24 months to now, where the average lease is 32 months.” The lengthening of lease terms was designed to keep monthly payments affordable during an era of “sticker shock” as new-vehicle pricing escalated sharply.
“When the off-lease cars came out of service after 24 months or so, there was a strong demand for them in the used-car market,” said Miller. “In fact, we created a waiting list for people to order a used car.” The average mileage at turn-in was approximately 18-20,000 miles at the end of 24 months. “Most people were driving under 10,000 miles per year.”
Founding a Company
Bob Betagole, the current CEO of Mike Albert Leasing, was one of the three founders of the leasing company, which opened for business in 1956. The newly formed company was named after Betagole’s uncle, Mike Albert, who was also one of the founders. At that time, Mike Albert was also operating three used-car lots in the greater Cincinnati area. Albert was a long-time fixture in Cincinnati’s used-vehicle market, opening his first used-car lot in 1929. Betagole and the other founder, his uncle Ray Nathan, ran the Mike Albert leasing business because by the late 1950s Albert was semi-retired. The first office for Mike Albert Leasing was in the Mike Albert used-car facility in downtown Cincinnati.
“Over the years, Mike Albert Leasing has been predominately a closed-end lessor. This is because we believe in creating the right used car,” said Betagole. “We are not opposed to doing open-end leasing. We will do open-end leasing today if it makes sense for the customer and for us. The reason we remain a closed-end lessor is because we have the automotive expertise that other companies do not. We have layers and layers of automotive expertise. Our entire background is automotive; it is not only financial. That is why we can take the residual risk.”
Betagole said the company views itself as an automobile actuary. “We are not always right, but over the years we have been right more often than we have been wrong,” said Betagole.
The Infancy of Leasing
Miller started working in the leasing business during its infancy.
“I worked in almost every job at the company. This included being a service writer, service department dispatcher, used-car manager, leasing sales, and national sales manager. I did it all. This was during the 1960s, 1970s, and 1980s, my first 20 years.”
Mike Albert Leasing’s first fleet salesperson was Charley Wolf, the ex-Cincinnati Royals basketball coach, who was hired in 1966. Wolf worked for the company until he retired 25 years later.
“He did a magnificent job for us,” said Miller.
The top fleet cars in the 1970s were the Ford Thunderbird, Chevrolet Monte Carlo, Pontiac Grand Prix, and Oldsmobile Cutlass Supreme. “This was when Oldsmobile was the king of fleet from 1973-79. Everybody wanted a Cutlass Supreme. Strangely enough, all of the fleet cars of that era were two doors. At that time styling took precedence over practicality, plus the two doors had a better resale value,” said Miller.
The Arab oil embargo in 1973 had a dramatic impact on Mike Albert Leasing and the used-vehicle market as a whole.
“At the time, the public was very critical of Buicks, Mercurys, and Cadillacs because their gas mileage was only 8-9 mpg. Bob Betagole met with me because I was the used-car manager at the time and he said: ‘We can’t afford to sell at the prices they are offering today. Don’t do any selling until I tell you. In the meantime, warehouse the cars. If you can sell for reasonable money, sell them; but if you have to sell for distress prices because that’s all they’ll bring, then don’t.’ We warehoused a lot of the cars until the energy crisis subsided sometime in March or April. We never dumped any used cars at that time, nor do we do today,” said Miller.
The Business Takes Off
Mike Albert Leasing’s business started growing rapidly in the 1970s and 1980s. “There were several reasons why. First, we moved to a brand-new facility in 1973 and started to computerize our operations. Second, we started to hire salespeople in different parts of the country,” said Miller. The first person Mike Albert Leasing hired outside of Cincinnati was Mark Radzely in Columbus in 1968. “We started hiring other salespeople in other cities on the East Coast and that started the ball rolling for us,” said Miller. “Up until that point, Mike Albert Leasing was a regional lessor. Today, we have 16 area managers throughout the U.S.”
In retrospect, today’s used-vehicle market is the most depressed since post-World War II. The declines in used-vehicle values during the fuel crises of the 1970s were relatively short-lived and eventually prices returned to their norms. “Today, with all the manufacturers incentives and special financing, used vehicles will not be as appealing as in the past and to maximize resale values it will take extremely hard work and lots of thought as to effectively remarket vehicles. If you want to maximize the return, it will take automotive expertise.”
One of Miller’s daughters, Lori Miller Glen, has followed in her father’s footsteps. She has been working for Mike Albert for almost 10 years and is currently the Illinois area manager. Miller has two other children, four grandchildren, and has been married for 40 years to his wife, Barbara.
Following retirement, Miller continues to live in Cincinnati and spends the winter in Florida. He will continue to act as an advisor on the Mike Albert residual committee, which forecasts the residual values of its closed-end lease vehicles. Todd Ryan, who has been promoted to VP of resale marketing, assumed Miller’s remarketing responsibilities.
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